ECI Telecom (Nasdaq:ECIL) stock has leaped 36% in two days of trade, bringing its share price from a 52-week low on October 5, of $1.96, to $3.28.
Of course, it's still a far cry from its 52-week high of $27.25, but the trend is a happy one for the company's investors.
The extraordinary rise on turnovers three times its average sparked a swirl of rumors and speculation. One possibility is that the warm report from Lehman Brothers (NYSE:LEH) last Friday did the trick.
Lehman analyst Steve Levy set ECI's target price at $10, three times its market value on Friday. He also said it is extremely undervalued.
Yes, ECI has consistently fallen short of Street expectations, but he says it's had a bum rap. He added he was not concerned about the company's liquidity, and was generally content with the company's financial state and direction.
But could a single sympathetic analysis do that much for ECI shares?
Another explanation for the rally could be that certain sections of its Q3 results were leaked to the market, and that the 'news' is good, very good.
Everything being relative, that is. ECI is still expected to lose 24 to 30 cents per share.
But given its history of disappointing the market, even expectations of it merely meeting forecasts are good news.
Another rumor going around says that within days, maybe even before releasing its results, ECI will be announcing the sale of one of its divisions for $100 million.
ECI's spokespeople aren't talking. But this particular rumor is very persistent, for whatever that is worth.
ECI has clambered back up to a $370 million market value, from its nadir of $190 million on October 5. Its Q3 statement, due tomorrow - Nov 7, may explain the leaps. By then, a $10 price target may not seem too farfetched.